Each company is required to carry out an inventory before drawing up annual financial reporting and in other cases. Annual inventory is usually carried out at the end of the year. What other cases when the inventory should be carried out at the company, as well as what timeframes are in the following.
Cases to carry out the inventory
The need to carry out the inventory to ensure the accuracy of the accounting and financial reporting data is provided in Art.10 of the Law of Ukraine “On Accounting and Financial Reporting in Ukraine” of 16.07.1999, No. 996-XIV (hereinafter - the Law on Accounting). In accordance with this article, in order to ensure the accuracy of the accounting and financial reporting data, companies must conduct an inventory of assets and liabilities, during which they are checked and documented their availability, status and evaluation.
In accordance with para.12 of the Procedure for submission of financial reporting, approved by the Cabinet of Ministers of Ukraine of 28.02.2000, No. 419, the procedure for inventorying and resolving disagreements regarding the actual availability of assets and liabilities with the accounting data is determined by the Ministry of Finance of Ukraine.
The inventory is regulated by the Regulations on the inventory of assets and liabilities, which was approved by the order of the Ministry of Finance of Ukraine dated 02.09.2014, No. 879 (hereinafter - Regulation No. 879). The said document should be used by legal entities, regardless of their organizational and legal forms and forms of ownership, as well as representations of foreign business entities.
Objects and periodicity of inventory is determined by the owner (leader) of the enterprise, except when the obligatory nature of its carrying out is stipulated by the legislation. What are these cases?
In accordance with the Regulation No. 879, inventory carrying out is mandatory:
– before drawing up annual financial reporting;
– in case of transfer of the property of a state company or budgetary institution to a lease, privatization of the property of a state company, transformation of a state company, transfer of a state company (its structural subdivisions) or a budgetary institution to the sphere of management of another governing body (on the date of transfer), except for transfer within one authority management, in other cases, determined by the legislation;
– in case of the establishment of the facts of theft or abuse, damage to the values (on the day of establishing such facts) in the amount determined by the head of the company;
– by a court decision or on the basis of a duly executed document, a body which, in accordance with the law, has the right to require to carry out an inventory;
– in the case of industrial accidents, fires or natural disasters (on the day after the end of events) in the amount determined by the head of the company;
– in case of termination of the company;
– in case of transition to the preparation of financial reporting according to international standards (as of the date of such transition).
If the company introduces collective (brigade) material liability, inventory must be made obligatory in case:
– changes of materially responsible persons;
– change of team leader (foreman);
– retirement from the team (brigade) of more than half of its members;
– at the request of at least one member of the team (brigade).
In this case, the inventory is carried out on the day of acceptance-transfer of cases in the amount of assets that are in the responsible storage.
It should be noted that the above list is not exhaustive, since Regulation No. 879 provides for that obligatory inventory is also carried out in other cases specified in the legislation.
Timeframes to carry out the inventory
This information is presented in the Table below for convenience.
Table. Timeframes to carry out the inventory of assets and liabilities prior to the preparation of annual financial reporting *
|
Time to carry out |
Inventory object |
Exceptions |
|
To the balance sheet date in the period of 3 months |
Non-current assets |
In addition to incomplete capital investments, items of fixed assets that are outside the company at the time of inventory, in particular cars, sea and river vessels that will be used for long-distance voyages, etc. |
|
Stocks |
In addition to the incomplete production and semi-finished products, other tangible assets that will be outside the company at the time of inventory |
|
|
Current biological assets, accounts receivable and payables, expenses and income of future periods, liabilities |
In addition to unused provisions, settlements with the budget and deductions for compulsory state social insurance |
|
|
To the balance sheet date in the period of 2 months |
Incomplete capital investments, work in progress, semi-finished products, financial investments, cash, targeted financing, obligations in respect of unused provisions, payments to the budget and deductions for compulsory state social insurance |
– |
|
Prior to temporary retirement from the company |
Items of fixed assets, including cars, sea and river vessels, that will be used for long-distance voyages, other tangible assets which will be outside the company on the date of inventory |
– |
|
Once every three years |
Land plots, buildings, structures and other immovable objects |
In addition to the immovable property of state companies, their associations, institutions and organizations, including those which were leased, concessioned, and state property that was not included into the authorized capital of economic organizations formed in the process of privatization and corporatization, which inventory is carried out in accordance with the requirements of the legislation on inventory of state-owned objects |
|
The volume of at least 30% with the obligatory coverage of all objects within three years |
Instruments, equipment, inventory (furniture) |
By decision of the head, the inventory of precious metals and precious stones contained in instruments, equipment and other products is carried out simultaneously with the inventory of these assets |
|
* Inventory of museum valuables and library funds is carried out in a specially established order. |
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